Texas Ruling Regarding Judgments on Mechanic’s Liens Reversed

September 3, 2014

The Court of Appeals for the Fifth District of Texas in Dallas recently ruled in Crawford Services, Inc. v. Skillman International Firm, LLC that a lower court erred when it denied a lienholder a judgment in a case involving a mechanic’s lien for $140,000 for work provided on an air conditioning system. The lower court came to the disputed conclusion even though it had ruled that Crawford Services was owed the money for the work. The Appeals court essentially slammed the door on allowing trial judges the discretion to deny a judgment of foreclosure and order of sale on a property subject to the perfected lien. The case was remanded on August 22 to the trial court “with instruction to render a judgment of foreclosure of Crawford’s mechanic’s lien and order of sale of the property.”

The ruling quoted a pro-lien rights case from 2004 in Texas’ Appellate court, which read that lien statute “is to be liberally construed for the purpose of protecting laborers and materialmen so as to afford the most comprehensive application without doing violence to the statute’s terms.” The American Subcontractors Association and the Texas Construction Association were among those that argued the lower court’s ruling would have, if not overturned, stripped away the very assurances contractors rely on for payment—the reason mechanic’s liens were established.

Nonetheless, an argument that relied heavily on definitions, intent and interpretation was presented in the case. NACM’s Secured Transaction Services’ Chris Ring noted that when a dispute gets to the point a suit is filed is filed, every aspect of the job account, statutes and case law is fair game, which can be a double-edged sword in states like Texas. “What comes into play is how a local judge interprets local statute and case law,” Ring said. “Hiring the right construction-oriented attorney to wage your suit action is key.”

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